GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have told our administration, people in my administration, to be fully cooperative. I want to know the truth.

ANNOUNCER: But Democrats want more.

SEN. CHARLES SCHUMER (D), NEW YORK: When you reveal the name of an agent, it's like putting a gun to that agent's head. This is not just a leap, this is a crime.

ANNOUNCER: Do the math. It's time to ally the quarterly hauls of the presidential candidates and recalculate their financial clout.

ARIANNA HUFFINGTON (I), CALIF. GOV. CANDIDATE: This is the way you treat women, we know that. But not now.

ANNOUNCER: She's brought sharp words and humor to the California recall campaign. Now, is Arianna Huffington set to drop out and move on?

Now, live from Washington, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. Well there's nothing quite like the call for a special counsel investigation to get the partisan sparks flying here in Washington.

Today congressional Democrats stepped up their demands for an independent probe into who leaked the name of a CIA operative. But Republicans and the Bush administration insist that a Justice Department investigation that is under way is good enough. Our senior White House correspondent John King and our Congressional correspondent Jonathan Karl are standing by.

First to John King. What id the White House, what id the president saying about all this today?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Judy, the president himself trying to convey the urgency that he attaches to this investigation today. And along the way, the president trying to rebut the allegations from the Democrat that the attorney general, John Ashcroft, cannot handle this investigation in a fair way.

Mr. Bush was in Chicago a short time ago raising money, also speaking to business leaders about the economy, when he offered his first statement on this investigation. The Justice Department is now conducting a full investigation into that illegal leak of classified information about the undercover CIA operative. The president says if anyone in his administration did this, that person, quote, "will be taken care of."

And the president voicing confidence that the Justice Department can conduct a fair and thorough investigation.

(BEGIN VIDEO CLIP)

BUSH: I'm absolutely confident that The Justice department will do a very good job. There's a special division of career Justice Department officials who are tasked with doing this kind of work. They have done this kind of work before in Washington this year.

I have told our administration, people in my administration to be fully cooperative. I want to know the truth.

(END VIDEO CLIP)

KING: Now, Ambassador Joseph Wilson whose wife was that -- is that undercover CIA agent initially blamed Karl Rove, the president's top political adviser. The president was asked today if he had talked to Karl Rove about this.

Now Karl Rove has emphatically denied any role in this to other senior administration officials. But the president did not answer the question directly. He simply said, I don't know of anyone in my administration who leaked classified information. And the president repeating his assertion that if anyone in his administration did do that, that they would be taken care of.

Judy, a sense of calm here on the White House. On the one hand, they say they will let the chips fall as they may. On the other hand, a sense of urgency, of course. This is the first major investigation to reach inside the White House.

And this memo circulated early this morning by the White House counsel, Alberto Gonzalez, telling everyone who works at the White House that there is a criminal investigation under way and that they must keep and not destroy any records at all that could be relevant.

A second letter expected from the Justice Department later today explaining exactly what records FBI agents want staffers here at the White House to keep -- Judy.

WOODRUFF: Those sorts of communications do focus the attention, don't they?

KING: They do. WOODRUFF: All right. John King, thanks very much.

And now we're going to go to the Hill, to Capitol Hill, talk to Jon Karl. Jon, how are Democrats reacting? Today the Justice Department did launch its investigation.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Certainly not enough to satisfy Democrats up here, Judy. And Democrats are so anxious to keep this issue front and center that tomorrow they will be hearing from on the House side Ambassador Joseph Wilson will speaking to the entire House Democratic caucus.

They say the meeting was previously scheduled, but they just announced that there will be a press conference after that meeting with Democratic leaders and Ambassador Wilson. Again, a sign of how Democrats want to keep this issue front and center.

Meanwhile, Democrats in the Senate tried and failed to get a resolution passed, a sense of the Senate resolution, calling on a special counsel to be named. It failed because Republicans blocked it from even coming up for a vote. But Democrats are getting hotter and hotter on their rhetoric. The latest shot came from presidential candidate John Kerry.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: President Bush's father called those who exposed the names of national security sources "traitors." And this President Bush needs to start going after any traitors in his midst, and that means more than an inside once-over from his friend and Karl Rove's client John Ashcroft.

(END VIDEO CLIP)

KARL: Now, Democrats in making this case and are constantly linking this to national security, saying the controversy shows that the White House is not strong on national security.

The latest came from Nancy Pelosi, who was also adding her voice today to those calling for an independent prosecutor.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Remember, this is a matter of the utmost seriousness. It is about nothing less than our national security. It's about nothing less than protecting people who risk their lives for us.

(END VIDEO CLIP)

KARL: Now, Vice President Cheney was up here this afternoon meeting with Senate Republicans. I got a chance to ask him if he knows who leaked that information. Judy, it may not surprise you, but he didn't answer my question. In fact, the only thing he said to me was "hi" -- Judy.

WOODRUFF: Darn, Jonathan. We were hoping he was going to give you an answer.

KARL: It was a try.

WOODRUFF: OK, Jon Karl, thank you very much at the Capitol.

And coming up I'll be asking Republican National Committee Chairman Ed Gillespie about this controversy and whether it is going to continue to be a problem for the president.

Another Iraq related dust-up on Capitol Hill. Republicans on the Senate Appropriations Committee today defeated a Democratic effort to split the president's $87 billion budget request in two, one bill for Iraq and Afghanistan, the other one for reconstruction.

Well Democrats and even some Republicans say that it is difficult to justify $20 billion of the request, which would be used for such things as developing ZIP codes and area codes in Iraq. Democratic Congressman Ron Emanuel is pushing a bill that would require each dollar spent on Iraq be matched with a new dollar spent in the United States here. He has printed up some T-shirts what is being paid for in Iraq to help to make his case.

Well in the race for the White House, there is an 11-hour dash for campaign money under way on this final day of the fiscal quarter. President Bush is expected to raise about $6 million today alone at fund-raisers in Chicago and Cincinnati. The reigning champion of '04 fund raising, the president is expected to report a haul of about $50 million just this quarter.

Now over on the Democratic side, Howard Dean is the money leader for the second quarter in a row. At last report on his Web site, his total was over $14.1 million and counting.

Well, John Kerry, John Edwards, Joe Lieberman and Dick Gephardt each expect to report somewhere in the ballpark of $4 million raised this quarter. Again, that's less than President Bush is raising in one day today. While Bob Graham and Wesley Clark are even farther behind in the $2 million ballpark. But don't forget, Clark just got into the race 13 days ago.

Well let's bring in our senior political adviser Bill Schneider. Bill, we know fund-raising is just one of the indicators, but it's a big indicator of how these candidates are doing. We've just looked at this latest quarter. But what about if you put the whole year together, who's got the momentum when it comes to money?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Judy, let's look at the first quarter scores at the end of March. John Edwards surprised a lot of people by topping the list, slightly ahead of the presumed front-runner John Kerry. Dick Gephardt, Joe Lieberman and Howard Dean were all bunched together in the second tier, Bob Graham lagged. The other three contenders, Dennis Kucinich, Al Sharpton and Carol Moseley Braun, barely registered.

Second quarter, war in Iraq. And that helped two contenders. President Bush declared himself a candidate for reelection and the money started rolling in. On the Democratic side, Howard Dean jumped from fifth place to first. The war gave Dean his issue, and his money.

Edwards suffered a big falloff in the second quarter from first place to fourth. The other candidates more or less stayed in place. And it did not escape notice that President Bush in the second quarter raised more money than all nine Democrats put together.

So, that was where we were at the end of the second quarter.

WOODRUFF: All right, so what's the story then coming out of the third quarter? Essentially that's the 1st of July through the end of September.

SCHNEIDER: Still Bush and Dean, Judy, but with an asterisk. As we showed you earlier, Dean has widened his lead over the other Democrats. His third quarter take could be three times as high as any other Democrats. That's momentum, what former President Bush once called the "big mo."

The other Democrats have stalled. In every case it looks like they will raise less money in the third quarter than they did in the second quarter. That's called "no mo."

President Bush continues to rake it in, once again, raising more than all the Democrats put together.

Now, the asterisk I mentioned is General Clark. His fund- raising, somewhere between $1 million and $2 million, isn't bad for two weeks. The Democratic race looks like Dean v. somebody. So far, nobody else has really caught on. Clark, it's too early to tell.

One thing we do know is whoever raises the most money by the end of the year before the election almost always gets the nomination.

WOODRUFF: Well, we see where it's headed right now. But there are three months to go.

SCHNEIDER: Exactly.

WOODRUFF: All right. Bill Schneider, thanks very much.

Well there is clearly another key factor in the presidential race, and that endorsements. Our senior political correspondent Candy Crowley has some breaking news on that front. She joins us from Los Angeles. Candy, what is it?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, you know, the one thing you need besides money is foot soldiers. The AFL- CIO has a lot of them. Dick Gephardt and the other the Democrats, of course, have been assiduously courting big labor hoping to get an early endorsement. It won't come. John Sweeney, who is president of the AFL-CIO, put out a statement saying that he will not call a general board meeting at this time.

It was kind of a nice no in -- to Dick Gephardt mentioned specifically in this statement and praised specifically in this statement. And Sweeney explains that while many of the unions have indeed endorsed Richard Gephardt, probably the biggest ally of labor in the race, and others intend to endorse it, there were some unions that wanted to keep looking at the race, read that, see who might kind of emerge from that sort of second tier to be the Dean versus who before they want to make any kind of endorsement.

So a big disappointment for Dick Gephardt. However, Sweeney did note that they've only twice before the nomination process begins -- have they only twice -- have they, in fact, endorsed somebody. So Sweeney says that they will maybe look at this again sometime in the future. But they left it open -- Judy.

Are you with me, Judy? I'm sorry, Judy, I couldn't hear you at all.

I'm hoping that you asked a question about California where I am, because I'm going to tell you about it anyway. What we have today is the candidates continuing on -- in particular, Gray Davis still importing big-name Democrats from out of state. Today it was, in fact, Terry McAuliffe, the head of the DNC. He is out here to help Davis court the labor vote, all in keeping with Davis' long-time message, and that is, that this isn't about his actions as governor. This is about Republicans who want to win an election that they cannot otherwise win the old-fashioned way.

(BEGIN VIDEO CLIP)

GOV. GRAY DAVIS (D), CALIFORNIA: I ask you to help me these last seven days. We can beat the recall. We can send a message from here to Crawford, Texas, to Washington, D.C., let's have no more power grabs in California. We're not -- we're not letting the Republicans get away with it.

(END VIDEO CLIP)

CROWLEY: So a couple more polls to be coming out this week. The candidates, of course, watching it very closely. Arnold Schwarzenegger to do a big, high-profile bus tour towards the end of this week. Again, the clock is ticking. One more week to go.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SCHUMER: The attitude that seemed to be indicated by the administration spokesperson yesterday -- Oh, we get plenty of leaks. This is just one of them and we investigate all of them -- is even more infuriating. This is not an ordinary leak.

(END VIDEO CLIP)

WOODRUFF: Democratic members of both the House and the Senate have spent the day blasting the alleged White House leak of a CIA operative's identity.

With me now to talk more about all this is Republican Party Chairman Ed Gillespie.

We appreciate your being with us today on this particular story.

ED GILLESPIE, RNC CHAIRMAN: You bet.

WOODRUFF: Why is the White House saying at this point that a Justice Department investigation is enough?

GILLESPIE: Well, the Justice Department investigation is the appropriate thing if someone committed a wrongdoing here. The Department of Justice -- these are people, Judy, who carry guns. They ought to look into it and investigate it. And in the past, we've seen many of the same Democratic members of Congress who have talked about, we don't need outside counsels, we don't need special counsels, and, in fact, opposed an independent counsel act, all of a sudden now saying, Oh, we ought to have one of those. And it's pure politics.

WOODRUFF: Well, but we've seen in years past, when there have been delicate issues like this, there's been no shortage of investigations in the past that have been -- that have brought in independent counsels, or special counsels because there is a potential conflict of interest. This is a Justice Department whose attorney general was appointed by the president.

GILLESPIE: But we've also seen, as these -- as I mentioned, senators like Senator Harkin, Senator Schumer have said in the past -- these independent counsels have been rife with abuse on both sides of the aisle. They've been politicized and these allegations haven't served to further any actual, meaningful public purpose. And the fact is if the DOJ is going to look into this as they are, they announced today in the investigation. The White House, everybody's been instructed to do all they can to get information to that investigation. That's the appropriate course of action. I know I sound like the piano player in "Casablanca," but I'm shocked that there's some politics going on here.

WOODRUFF: Well, you keep saying that. And yet, the Republicans -- I mean, the Democrats are saying this is a matter of national security. I mean, we just heard Senator Schumer say on the floor of the Senate, when you reveal the identity of a CIA operative, it's like putting a gun to that person's head.

GILLESPIE: If that was done by someone -- anyone in the White House. And again, that's why I think that's why it's appropriate -- it's a violation of a federal law, if that was done. And the Department of Justice ought to look into it. But we don't know that that was done there. But it certainly warrants an investigation.

WOODRUFF: So you're saying after all the reporting -- I mean, Bob Novak himself has said he was given the information by two senior administration officials. Are you questioning his word?

GILLESPIE: No, not at all. And I saw that account, and I saw where he said it was from the administration. He said no one from the White House called him, as I recall, is what he said.

And then there's a report today in "The White House Bulletin"...

WOODRUFF: But he said he was given the information in a conversation with someone.

GILLESPIE: From the White House or from the administration?

WOODRUFF: He said two top administration officials gave him (UNINTELLIGIBLE)

GILLESPIE: Administration officials. That's different from the allegations been out there that it was a White House official. And now there's reports that after Bob Novak printed his column, it's possible that people highlighted that or pointed to that. That's different. If that's the way it came out, there's no violation of any law if someone highlights what's already publicly been reported.

So I think that there's a lot more to play in here. There is a lot of politics. The fact is that Ambassador Wilson is not only a, you know -- a former foreign service officer, former ambassador, he is himself a partisan Democrat who is a contributor and supporter of Senator Kerry's presidential campaign. He is -- in the past, spoken to a group called Win Without War I think is what it was called. It's part of moveon.org, and the Greenpeace and other organizations that are opposed to the president's agenda, and anti-President Bush.

And so when he first came out and made this charge, it's not surprising he would say something about Karl Rove being behind this, and then have to come out and back away from that statement and say, Well, actually, I don't have any indication of that.

WOODRUFF: Well he later said he meant the broader political shop at the White House. But here's my question...

GILLESPIE: But -- Judy -- excuse me. What he said was that the adviser to the president, Karl Rove, should be frog-walked from the White House in handcuffs and then came out and said, Well, actually I really had no basis by which to make that kind of statement.

WOODRUFF: OK. Well, let me ask you this -- are you saying that Ambassador Wilson has essentially lied? Has not told the truth? Because he's the one who apparently is saying several reporters called him and said, We've been given this name by someone in the administration.

GILLESPIE: I've not said that. What I've said is that Ambassador Wilson is clearly -- has a partisan history here, as someone who supports John Kerry, who is just on your air talking about the problem here. This is a guy who's a maxed out contributor to John Kerry, who has spoken to organizations that are seeking to defeat the president of the United States, has had to back away from statements he made to the public on the air.

So there's a lot more to play here. We'll have to see. And the Justice Department should find out what's accurate and what's not and then act appropriately. And I suspect if someone at the White House did something in violation of the law here, the last thing they need to be worried about is their job security.

WOODRUFF: So -- but again, from the...

GILLESPIE: Meaning that that's the least of their concerns. There would be a lot more things they will have to deal with if that's the case.

WOODRUFF: But you're -- you're not saying the administration is just attributing this all to politics are you?

GILLESPIE: No, not at all. Not at all.

WOODRUFF: Ed Gillespie, who's the chairman of the Republican National Committee. It's good to see you.

GILLESPIE: Great to see you too. Thank you.

WOODRUFF: Thank you very much for coming by. Appreciate it.

Meantime, in Britain, Prime Minister Tony Blair has endured his own critics related to the war in Iraq, many from within his own party. Well, Blair today defended his decision to go to war in an address to fellow Labor Party members. And he said he would make the same decision all over again.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: Suppose the terrorists repeated the September 11, or worse. Suppose they got hold of a chemical or biological or nuclear dirty bomb. And if they could, they would. What then? And if it is the threat of the 21st Century, Britain should be in there confronting it, not because we are America's poodle, but because dealing with it will make Britain safer.

(END VIDEO CLIP)

WOODRUFF: Blair went on to say -- quote -- "we who started the war must finish the peace."

Well, call it a command performance -- Wesley Clark comes to Washington. Will the retired general turned presidential candidate capture some Congressional endorsements? The latest news from the campaign trail just moments away.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines in our "Campaign News Daily."

Democratic hopeful John Kerry has picked up the support of a former Senate colleague and two-time presidential candidate. Gary Hart endorsed Kerry's White House effort earlier today. Hart sought the Democratic nomination in 1984 and '88, and considered running again this year. Wesley Clark is here in Washington meeting this afternoon with Democratic lawmakers from the House and Senate. Clark has already been endorsed by close to a dozen members of Congress, and he could pick up more support after today's meeting. Louisiana Senator John Breaux did not issue an endorsement, but he told CNN that Clark would run well in his part of the country.

President Bush is heading back to New Hampshire for the first time in almost a year. "The Manchester Union-Leader" reports Mr. Bush is going to Manchester on October 9 for a business luncheon with the Chamber of Commerce. Mr. Bush lost the 2000 New Hampshire primary to John McCain, but he narrowly parried the state against Al Gore.

Coming up next, Howard Dean took a shot at the record books, and we'll tell you how he did.

(COMMERCIAL BREAK)

WOODRUFF: We aren't sure yet if the folks at the Guinness Book of World Records will buy it, but Howard Dean's campaign insists the Democrat's nationwide conference call with supporters last night was a record-setter. According to the unofficial count, 3,557 people connected to the call. It's an impressive number, but nowhere near the 10,000 people that the Dean camp said that they had hoped for. We'll have to ask him about that.

Well, that's it for today's INSIDE POLITICS. We thank you for joining us. I'm Judy Woodruff.

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